Howard v Commissioner of Taxation (No 2) [2011] FCA 1421

FEDERAL COURT OF AUSTRALIA

Howard v Commissioner of Taxation (No 2) [2011] FCA 1421 Citation: Howard v Commissioner of Taxation (No 2) [2011] FCA 1421

Parties: STEPHEN JAMES HOWARD v COMMISSIONER OF TAXATION

File numbers: VID 80 of 2010 VID 28 of 2011

Judge: JESSUP J

Date of judgment: 14 December 2011

Catchwords: TAXATION – Income Tax – Taxpayer awarded equitable damages as compensation for losses sustained in joint venture where co-venturers acted in breach of fiduciary duties – Taxpayer a director of company proposed by him and some other joint venturers, also directors, to take benefit of business opportunity – Joint venture failed and opportunity lost as result of breach of fiduciary duties – Whether taxpayer held award of damages on trust for company – Given that award had character of income, whether included in assessable income of taxpayer. TAXATION – Income tax – Distributions by non-resident trust estate – Whether included in assessable income of resident discretionary beneficiary – Net income of trust estate – whether included proceeds of shares sold back to company – Whether difference made by interposition of bare sub-trust – Taxpayer beneficiary's share of net income of trust estate – How calculated when all beneficiaries discretionary interest – whether all beneficiaries contingently entitled to whole of corpus of trust estate. TAXATION – Income tax – Administrative penalty for omission to return as income distribution received from non-resident trust estate – Counsel's advice obtained when full facts not known – Supplementary advice not sought – whether taxpayer's conduct intentional, reckless or involved failure to take reasonable care.